Legal

Brexit White PaperLast week, the UK House of Commons voted by an overwhelming 498 votes to 114 to pass the Government’s Brexit Bill.

The Bill authorises PM Theresa May to trigger Article 50, beginning the formal process of the UK’s exit from the EU. A convincing win on the first vote on the Bill brings her one step closer to meeting her self-imposed March deadline.

A day later, in response to growing pressure from MPs, the Government published its Brexit white paper, entitled “The United Kingdom's exit from and new partnership with the European Union”, a formal policy document outlining the Government’s negotiating strategy.

The 77 page paper reiterates much of Theresa May’s 12 point plan and sets out the UK Government’s key objectives for the upcoming negotiations, including:

Sovereignty

The Government plans to introduce the Great Repeal Bill to repeal the European Communities Act 1972 and “wherever practical and appropriate” convert existing EU laws into domestic law. The paper notes that, to allow businesses to continue trading and provide fairness to individuals, “the rules will not change significantly overnight”.

It confirms the jurisdiction of the Court of Justice of the European Union (CJEU) will be brought to an end and in its stead the UK “will seek to agree a new approach to interpretation and dispute resolution with the EU”. The paper provides examples of dispute resolution mechanisms in place in other international agreements but notes “the actual form of dispute resolution in a future relationship with the EU will be a matter for negotiations between the UK and the EU”, and that it “should not be constrained by precedent”.

Northern Ireland

The paper acknowledges the UK and Irish economies are “deeply integrated”. It notes the Government’s commitment to retain “as seamless and frictionless a border as possible” between Northern Ireland and the Republic, “while protecting the integrity of the UK’s immigration system”. The Common Travel Area between the UK and Ireland is noted as predating the EU and the paper recognises the “special importance” to people being able to move freely between the UK and Ireland, north-south and east-west, in their daily lives. The paper does not provide any specifics as to how this might be achieved. It seems that this would only be possible if the UK remained within the customs union, a prospect that Theresa May has ruled out.

EU Trade

The paper confirms that the UK will leave the single market and seek a free trade agreement to ensure the "most frictionless trade possible" in goods and services with the EU. It is suggested a new trade deal could "take in elements" of current single market arrangements. It states the Government will seek the "freest possible" trade in financial services between the UK and EU, describing the City of London as Europe’s only global financial centre, on which the EU will continue to rely. This seems to be a definitive nod towards sector specific bespoke trade agreements; whether the EU will be agreeable to such an approach remains to be seen.

A mutually beneficial new customs arrangement”, allowing the UK to negotiate its own trade agreements, is another objective set out in the paper.  It is noted that this will bring the UK outside the EU’s customs union, but the paper states that cross-border trade with the EU should remain as “frictionless and seamless as possible”. This will be achieved through the UK’s “world-class customs system which handles imports and exports from all over the world”. The paper credits the UK’s modern technology for delivering one of the world’s most efficient customs regimes.

The principle of free movement of people will no longer apply to the UK. The paper provides that businesses and communities will be consulted and Parliament will have an "important role" in and will contribute to shaping a new immigration system. A phased implementation approach will be taken giving businesses “enough time to plan and prepare” for the new rules.

EU nationals in the UK

The paper states that securing the status of the 2.8 million EU nationals who live in the UK and the rights of 1 million UK nationals living in EU Member States is an early priority for the negotiations. The Government is “engaging closely with EU Member States, businesses and other organisations” to ensure that there is “a thorough understanding of issues concerning the status of EU nationals in the UK”. The specific reference to the numbers of people involved suggests the UK is trying to position this point as more in the EU’s interest than the UK’s.

Transitional Period

Echoing Theresa May’s Lancaster House speech the paper acknowledges it is “in no one’s interests for there to be a cliff-edge for business”. A transitional period of phased implementation of the new legal status of the UK is proposed. The Prime Minister’s warning is also reiterated, advising the EU 27 that “no deal for the UK is better than a bad deal for the UK”.

The white paper builds on Theresa May’s 12 point plan but answers few of the questions her speech originally raised, the most pressing for businesses and individuals being: how is a UK committed to leaving the single market and customs union going to obtain the “freest and most frictionless trade possible” with the EU?

This week, the House of Commons will debate the paper and consider amendments to the Brexit Bill, before it goes to the House of Lords for full Parliamentary approval.  Opposition MPs have already tabled numerous amendments for discussion.

By Éanna Mellett Partner at Matheson.